Bank of Portugal Lowers 2014 Growth Forecast on Exports

Joao Lima

June 11, 2014 — 8:00 AM EDT

Portugal’s economy will expand less than previously forecast this year as export growth slows, the country’s central bank said.

Gross domestic product will rise 1.1 percent in 2014, lower than the 1.2 percent projected in March, the Lisbon-based Bank of Portugal said today. Growth will accelerate to 1.5 percent in 2014 and 1.7 percent in 2016.

Portugal exited a three-year bailout program last month without the safety net of a precautionary credit line. While it emerged from its longest recession in at least 25 years in the second quarter of 2013, Prime Minister Pedro Passos Coelho still has to cut spending to meet budget targets after relying mostly on tax increases last year.

“Although there was a significant consolidation effort in the last three years, the adjustment of public accounts is still not concluded,” the central bank said.

The central bank’s forecasts compare with the government’s projections for growth of 1.2 percent in 2014 and 1.5 percent in 2015. GDP contracted for the first time in a year in the three months through March as exports dropped.